After getting IPO allotment, many people find it confusing to decide when and how to sell their shares. As per a SEBI study, about 54% of IPO shares allotted to retail participants are sold off within a week of their market debut. This shows that most investors sell quickly, often without a clear plan. This guide covers detailed info on how to sell IPO shares, including when and how you can do it the right way.
How to Sell IPO Shares
Selling IPO shares is the process an investor follows to sell the shares they were allotted during an Initial Public Offering. After a company is officially listed on the stock exchange, the allotted shares appear in the investor’s Demat account. From that point, the investor can sell them, just like any other stock. The process involves using a trading account linked to the Demat account. Deciding when and how to sell depends on personal financial goals, market conditions on the listing day, and the investor’s view of the company’s long-term future.
Eligibility to Sell IPO Shares
Before selling, an investor must first satisfy a few conditions. The primary factors determining eligibility to sell shares are as follows:
- Demat account credit: The allotted IPO shares must first be credited to your demat (dematerialised) account. This usually happens a day or two prior to the stock’s official listing on the exchange.
- Stock exchange listing: You can only sell the shares after the company is officially listed and trading begins on the stock exchange (like the NSE or BSE). On listing day, trading for the new stock may start at a specific time, such as 10:00 AM.
- IPO lock-up period: This is an important restriction. An IPO lock-up period is a fixed duration when specific categories of investors are restricted from selling their holdings. This is done to prevent a massive sell-off, which could cause the stock price to fall sharply.
- Investor category: The lock-in rules depend on the type of investor.
- Retail investors: Generally, retail (individual) investors who receive shares in the public allotment do not have a mandatory lock-in period and are eligible to sell their shares on the listing day itself.
- Anchor investors: They refer to major institutional buyers who receive share allocations ahead of the IPO’s public launch. They typically face a lock-in period, such as 30 days for 50% of their shares and 90 days for the rest.
- Employees and insiders: Company founders, promoters, and employees who received shares may also have longer lock-in periods, sometimes lasting six months to a year or more.
For example, in the JSW Cement Ltd mainline IPO dated August 6, 2025, anchor investors were subject to lock-in periods of 30 days (ending on September 10, 2025) and 90 days (ending on November 9, 2025), which helped protect the stock price by limiting early share sales by large institutional holders.
Selling Strategies
Investors use different methods to sell their IPO shares, depending on their goals. Common IPO selling strategies include the following:
- Selling on listing day
This is a common short-term strategy. Investors who applied for the IPO expecting “listing gains” often sell their shares on the first day of trading. They do this to take advantage of the initial high demand and price, which is often higher than the allotment price.
- Holding for the long term
This strategy is used by investors who believe in the company’s fundamental strength and future growth prospects. They ignore the listing day price changes and hold the shares for many months or years, treating it as a long-term investment.
- Selling in installments
This strategy involves selling shares in small blocks over time rather than all at once. An investor might sell 25% on listing day, 25% after the company’s first quarterly results, and so on. This approach allows an investor to secure some profit while still participating in potential future price increases.
- The 50/10 hybrid approach
A variation of the installment plan is to sell 50% of the shares immediately upon listing. This recovers the initial investment and often locks in a profit. The remaining 50% is then sold in smaller 10% blocks over the following quarters, potentially based on the company’s performance in its earnings reports.
Tax Implications
Understanding the tax implications of selling listed IPO shares is important for investors, as gains are taxed based on the holding period, with the primary considerations being as follows:
- Holding period: The classification of your gains depends on a 12-month holding period, which is calculated from the date of allotment, not the listing date.
- Short-term capital gains (STCG): If you sell shares within 12 months of allotment, the profit is classified as STCG. Securities Transaction Tax (STT) is paid on the sale, the profit is taxed at a uniform 20% rate along with relevant cess and surcharge.
- Long-term capital gains (LTCG): Arise when shares are sold after being held for a period exceeding one year, profits are treated as LTCF. Capital gains tax on IPO up to ₹1.25 lakh in the financial year and are completely exempt from tax. Any gains exceeding this ₹1.25 lakh limit are taxed at a rate of 12.5% (plus cess and surcharge), without the benefit of indexation.
- Dividend income: Any dividends you receive while holding the shares are not treated as capital gains. Such income is combined with your overall taxable earnings and taxed based on your respective income slab rate.
Broker Recommendations
Choosing the right stockbroker is important for a smooth IPO experience. Important things to consider when picking the right choice from the broker recommendations for IPOs are as follows:
- ASBA facility: The broker should offer a simple and reliable online process for applying to IPOs using ASBA (Application Supported by Blocked Amount). Under this system, the application funds remain frozen in your bank account rather than being immediately withdrawn.
- Platform stability: The broker’s trading app and website must be fast and stable. A platform that crashes or slows down during high-traffic events, like an IPO listing, can prevent you from selling at your desired price.
- User-friendly interface: The process of placing a sell order should be clear and simple. This is especially important for new investors.
- Brokerage and other charges: Understand all the fees involved in selling, such as brokerage, STT (Securities Transaction Tax), and depository (DP) charges. Paying lower brokerage charges allows you to retain a larger portion of your earnings.
- Customer support: Reliable assistance proves valuable in case of technical glitches or queries during the IPO selling process on listing day.
- Research reports: Some brokers provide analysis and reports on upcoming IPOs. This information can be a useful data point (but not advice) when deciding whether to apply or how to plan your selling strategy.
Real-World Examples
When it comes to selling IPO shares, investors often use diverse strategies based on their financial goals, risk tolerance, and market conditions. Here are two real-world examples showcasing different selling strategies:
- Quality Power Electrical IPO
This case demonstrates a long-term “buy-and-hold” approach. Investors who held shares from the ₹425 IPO price saw them rise to ₹909 in 2025, a 114% gain. By avoiding short-term selling, investors in a fundamentally strong company captured significant wealth, plus the potential for future dividends.
- Stallion India Fluorochemicals IPO
This example shows a hybrid or “staged selling” strategy. The stock quickly rose from ₹90 to ₹189, a jump of 110%. An investor might sell 50% of their shares to recover their initial cost, then sell the remaining shares in stages. This method balances risk by locking in profits early while still participating in any future gains.
These examples show there is no single “correct” way to sell. Investors must choose a strategy, be it holding for long-term growth or selling in stages to manage risk that fits their personal risk appetite.
Advanced Strategies
Beyond basic selling, investors may use more structured plans. These advanced strategies are about setting rules before the listing to guide decisions, such as:
- Cost-basis recovery
This is a disciplined version of partial selling. The goal is to sell exactly enough shares to get back your initial investment amount as soon as possible (often on listing day). Once the initial capital is secured, the investor is no longer at risk of losing their own money, and the remaining shares can be held for long-term growth.
- Price-target-based selling
This method involves setting specific price targets for selling portions of your shares. For example, you might decide to sell 30% of your shares if the price increases by 50% from the IPO price, sell another 30% if it increases by 100%, and hold the rest. This is a rule-based system that removes emotion from the decision.
- Time-based installment selling
This strategy involves selling shares in fixed portions at set time intervals. For example, an investor might sell 25% of their shares every quarter for one year after listing. This approach averages the selling price over time and is useful if you believe the stock may be volatile but will trend upward. At times, the IPO schedule is aligned to coincide with the release of the company’s quarterly financial results.
Market Comparisons
The IPO market functions differently across countries, especially between India and the United States. The main distinctions are seen in the volume of listings, the type of investors involved, and the total funds collected. These variations help explain why strategies for selling IPO shares can differ based on region and investor type.
The comparison below gives a clear view of both markets in 2025:
| Feature | India IPO Market | US IPO Market |
| Number of IPOs | Around 100 (first 6 months of 2025) | Approximately 182 (YTD 2025) |
| Capital raise | About $4.6 billion USD | About $33.3 billion USD (YTD 2025) |
| Global market share Share | 8% of global proceeds (first-half 2025) | 28% of global proceeds (first-half 2025) |
| Listing venues | National Stock Exchange (NSE), Bombay Stock Exchange (BSE) | New York Stock Exchange (NYSE), NASDAQ |
| Tax on selling shares (for domestic residents) | STCG (Held ≤ 12 mos): 20%LTCG (Held > 12 mos): 12.5% on gains over ₹1.25 lakh | STCG (Held ≤ 1 year): Taxed at ordinary income rates (10%–37%)LTCG (Held > 1 year): Taxed at 0%, 15%, or 20% (based on income) |
Conclusion
All in all, how to sell ipo shares is less about finding one “right” method and more about personal discipline. The most successful investors move beyond the listing day hype. They define their exit strategy and price targets before the stock even lists, ensuring the decision aligns purely with their financial goals, not the market’s noise.
FAQ’s
Common selling strategies include selling shares on the listing day to capture quick profits, holding shares long-term for potential growth, selling in installments over time, and hybrid approaches like selling a portion immediately and the rest gradually.
The IPO lock-up period is a mandatory duration during which certain investors, such as promoters and anchor investors, cannot sell their shares. This prevents a sudden flood of shares on the market that could cause price volatility.
Retail investors can typically sell IPO shares once they are credited to their demat account and listed on the exchange. Shares are tradable from the listing day, except for those subject to lock-up restrictions for promoters or early investors.
Yes, consulting a broker is advisable. Brokers can provide guidance on timing, market conditions, tax implications, and the best selling strategy fit for your financial goals, helping to navigate price fluctuations and regulatory requirements.
The lock-up period can vary; retail investors usually have no lock-up, while anchor investors may have 30 to 90 days. Founders and promoters often face longer lock-ups, sometimes up to a year or more, restricting share sales during that time.
Short-term capital gains (if sold within 12 months) are taxed at 20% plus cess, while long-term gains (held over 12 months) above ₹1.25 lakh are taxed at 12.5% plus cess. Dividends received are taxed as per your income slab.
On listing day, once shares are credited to your demat account, you can sell them through your trading platform just like regular stocks. The sale depends on market demand, price movement, and your selling strategy, often aiming to capitalise on initial listing gains.
